How Globalization affects Currencies, Monetary Policies

With the acceleration of ongoing Globalization market conditions have changed consequently affecting the value and volatility of national currencies. In European Union the Euro EUR has replaced many local currencies. The U.S. Dollar even still maintaining its powers has been challenged by the Renminbi (RMB). Many other currencies are pegged to the U.S. Dollar and the Euro EUR to avoid fluctuations and harmful volatility. The power of such unification of Global currencies is used by some countries such as China and Germany to maintain growth, the weakness of such unification of Global currencies consequence for many countries such as Greece and Spain to accumulate huge national debt and many more other countries to deepen into genuine poverty. As everything else in the process of Globalization there are winners and there are losers as well.

Currencies reflect the economic situation of their issuers: when Japan got into economic crisis in the 90s the yen (JPY) reduced is value, when the US got into 2007 Recession the U.S. Dollar lost price far in advance then when Greece got into “high debt” trouble the Euro started deteriorating; it should be clear that major currencies like the U.S. Dollar (USD), the Euro (EUR), the Renminbi (RMB) and the Yen (JPY) reflect most recent economic developments and the central banks projections; however, in the new Globalization the accumulation of National Debt as a result of stimulating economies does not necessary decrease currencies values for which good example is the USD in the last year or so and austerity fiscal policies with promises of cutting deficit and playing sound “old” economics does not necessary increase currencies value for which good example is the EUR and its most recent developments; nor by expanding one’s Social and Infrastructural policies would necessary decrease their currencies values for which good example is the RMB which value is considered depreciated instead, nor by heavily subsidizing your industries and SMB would decrease one’s currencies value for which good example is the JPY.

Many more factors are provoking currencies fluctuation but the trend goes like this: the Globalization has weighed more on

the Demand-to-Supply side of the economies instead of the Supply-to-Demand side as it always had been;

the Deflationary market forces than and instead of the Inflationary such as it always had been;

the Prospective for stable market development than and instead the Prospective for expanding industrial production as it always had been.

However, the variety of “many more factors” mentioned above such as:

socio-economic structures

productivity

infrastructure

All of these are considered in the Market Economics as “equity” and play a major role to currencies value.

Here, it will be important to mention the “relativity” of the economic “tools” for maintaining currencies value, because even a general trend could be apprehended the currencies value could easily go the other way and supply may overrun demand, and inflation may overrun deflation, if proper economic rules are not expanded internationally; but still the possibilities for a very accelerated industrial production in regions of China, India, Vietnam, Brazil are so “easily” achievable because of the mobile highly developed structures of the global conglomerates, the high technologies and the global capitalization basically offset in a short term these possibilities of turn around. However, certainty in the modern economics I believe are quite limited: there are more like of “quantum economics” adjusted by economic “tools” used as “parameters” instead of philosophical “certainty” of the dialectic economics; (for more see: Quantum Economics – Philosophy of the Economy”)

The currencies value reflects the ongoing Globalization and how adequately individual governments follow “the momentum” in history: the Demand-to-Supply motion of possibilities for development; thus, under certain condition lifting one’s Social and Infrastructural expanses might be positive to balance the Demand-to-Supply ratios, in another it might be negative for the economy; also these economic “tools” could differ from country to country and from region to region, so proper evaluation of individual countries “current possibilities and momentum” should be paramount when balancing Demand-to-Supply ratios. For some countries giving a bit more freedom to businesses may accelerate their economies for another regulating business to make it more “secure” for easier financing could be the answer of “the momentum”. However, the trend is the trend, and for the most developed economies the biggest problem at the moment is the lack of proper Demand. Production based economics of the Capitalism when production means mostly industrial production that adds the majority to these countries GDP must well change its (the Capitalism) ideological approaches toward economics and start using more pragmatically inclined approaches of “as it comes: as it goes” economics of market adjusting to keep Demand-to-Supply ratios balanced.

For the last couple of years it has become obvious that the system of economics of self-adjusting Supply-to-Demand has become inadequate and governments started taking the role of investors, banks and promoters which trend if followed will move to governments taking on the majority of business, if a few more recessions go through, while the governments are generally inept in doing and promoting business and lack any flexibility so needed in business: they the governments should be only the “invisible hand” for directing and correcting economies and the consequential currencies values.

To prevent from recessions is not easy but could be possible if:

· economic “tools” are used pragmatically instead of currently used ideologically;

· general business laws start applying to all participants on the Global marketplace, which could promote the Small to Medium Businesses (SMB) and Small to Medium Investors (SMI) to become equally competitive to the Big Businesses and Big Investors;

· Global central banking represented by the World Bank, IMF and WTO change their role from being “the lender” into the one of being “the controller” of keeping Global Demand-to-Supply balance trough using low interest loans and subsidies to SMB to promote Global growth and to impose renewable energies and environmentally friendly enterprises too;

· Global central banking should use commercial banks for marginalized lending on set matrix to promote growth;

· The priorities of the Global “controlling” should change from lending to inflation (Demand-to-Supply balance), because that’s the most important indeed.

Currencies reflect individual countries adaptability to the new developments in the new Globalizing marketplace but also the currencies are becoming more like a computer game and particularly when (RMB) becomes a natural balance to the (USD) their (the currencies) value will well increase its volatility if this Globalization is executed properly:

Good example of how such Globalization was not executed properly is what happened in the European Union where countries were politically united under the same currency but their economies differed substantially in development and living standards: the EU did not attempt to equalize these differences by strong social programs and business laws; it could have been done by using commercial banks to access SMB and also by lifting individual countries standard of living, but instead it has been done by governmentally run programs, very complicated and inaccessible to the majority of SMB and by general lack of Social Programs, Business Laws, and Consumer Protection Laws . As a result of the EU inadequate actions, some countries like Greece deepened in National Debt and others like Bulgaria (which currency is pegged to the EUR) deepened in Genuine Poverty in which both cases the value of the (EUR) and the overall economic growth of the EU was not improved. The austerity measures approved by the EU obviously were not accepted as positive by the currency traders so the value of (EUR) is drifting away. The way EU has been developing is more like having a million dollar house next to the ghetto and wondering why its market value is very low. It is obvious that the condition of your nationhood is important for your prosperity, the schools in the area, its crime rate and etc.

What was referred to EU and the problem of underdevelopment for the EU, that brought all of its problems, basically applies to the rest of the world, where such inequality is huge, and because of the Globalization has become not a problem for these poor underdeveloped countries but for the entire world, and mostly for the most developed industrialized countries, which capacities of industrial production has long time overrun their own demand (here it is important to mention that underdevelopment exist in some parts of the most developed countries internal areas: in the US some states like Michigan, in EU many countries like Bulgaria and in China many areas).

The model of self-adjusting trickle-down capitalism based on profitability from industrial production mostly does not posses the capabilities to change the Global marketplace because all countries cannot be industrialized when technologies cut on manpower and outsourcing moves production elsewhere; still I believe the freedom of business and the vitality of entrepreneurship should be used but many fundamental changes should be done so instead with the next recessions the governments do not take over business: bureaucratization seems very monstrous way of solving these problems indeed; there goes away with personal freedoms and there goes away with liberty too. But for these freedoms to be saved the Global business, financial system, the ways underdeveloped markets are approached and the ways economics is used must change.

Possibilities verses Investment

The real possibilities for market development and individual access to such must reflect the flood of available products and services aggregated by the ongoing Globalization, rising Productivity, and the Internet, which supported to the available Capital and developed Financial structures have expanded rapidly enveloping any market; developed or developing alike. The exogenous forces of overproduction prompted by the exceeding powers succeeded by the Transnational supplemented by the Large Investors and Public Capital have come to a turn around point: from a supply driven trend of shortages and inflation to a demand driven trend of overproduction and deflation – with two main consequences: Inequality and Debt the former causal of the power these Transnationals posses as access to marketplace and public and private capital, and the legal superiority over other market participants, the Communists Block’s fall, the Chinese admittance in WTO, the 2007-9 Recession, and many more historical developments have helped the forces of the Globalization and Productivity empower to succeed what the global economy is : from declining middle class ,rising underemployment and debt in the developed markets to the increasing poverty and radicalization in many developing markets; in both the lack of opportunities have created radicalization bringing back ‘old’ almost forgotten excessive nationalism, xenophobia, religious radicalization, and most demanding the widening Earth Pollution by old vehicles, primitive heating, deforestation, and plastic disposal.

The Foreign Direct Investment through the Transnationals has become the main tool for global economic development, but unless more than 75% of the global resources and revenue goes tho them they employ a low digits globally: the high technologies and perfected organization have given opportunities to reduce employment through mechanization along with outsourcing and moving to less demanding in terms of labor and environmental regulations countries. Thus the global economics have evolved from pro-supply driven such to a pro-demand; thus the principles of the ‘old style’ Capitalism that are founded on industrial production are losing their abilities to prompt enough business and employment needed for farther market development.

As it could be concluded the exogenous as well endogenous forces under the most recent developments have changed the trend from The new possibilities for expanding business without prompting inflationary forces of the past. The trickle-down economics approach of tight leach to prevent inflation has become counterproductive, therefore. The budgetary-economics supporting the former approach has produces debt: national and individual alike – on a mass scale such debt has enveloped the global marketplace. To maintain social and infrastructural expenses while inequality rises and employment is scare has become paramount however current system cannot invoke such activities, thus further deepening in both: inequality and debt are natural to the markets. What the Central Banks have done through Quantitative Easing has attempted boosting business activities by flooding markets with more capital eventually reaching down to the small to medium businesses and investors that are the main employers; however, the entire Economics has been persistent to their development: the business laws in contracting, liability, the environmental, labor, consumer protection, insurance, bonding, intellectual protection laws that build-up Economics and leverage Market Security have been insufficiently adjusted, and therefore the overall effect from such capital injection by the central banks could not succeed but very shallow growth, indeed. The constrains on the developing economies by the developed economies and world finance institutions, as well the EU on their members, went even further by imposing to them pro cyclical economic policies that resulted in total disaster: from Greece and Bulgaria to Spain and Ireland results are the least slow-motion business and income growth.

So the Quantitative Easing without the right Market Tools to spur Market Development is highly improbable or just limited. While the Shady business environment gives advantages to the Transnationals and Large Investors it greatly undercuts their counterparts thus limiting the QE abilities.

The individual markets; developed and developing are deeply inter-winded in a global marketplace not being able to protect from one another economic turbulence: the 2007-9 Great Recession is the best example of it – started from the US and enveloped the World. The presumption that protectionism would have saved someone is Utopian. Same inter-winded global marketplace becomes even further such by the Earth Pollution Issue and the necessity from immediate action. The farther industrialization remotely resembling the past could be catastrophic for the Earth environment, on another hand the growing inequality, debt, unemployment, and underemployment may well aggregate this trend. So, to expect the ‘business as usual’ to have any substantial long term success is unrealistic. On micro and macro level market policies must be applied to apprehend the existing market forces into a working global marketplace.

The tight leach Capitalism relies on, the relatively high lending rates to small to medium businesses and investors under loose market security that makes start-ups easy and doing business or accessing lending hard – condition benefiting the Transnationals and large investors; economic system that had performed well in the Past, before the beginning of the 21st Century, system of supply driven economies, but as said before the system is not performing any close to the possibilities of this new conditions. The Foreign Direct Investment and the International Finance Institution lending approaches cannot respond to the needs of this new century: the required global alleviation of Poverty to save Earth, the capabilities af these same Transnationals and Chinese manufacturers to overcome almost any market demand, that tipped-off the existed market trend from supply to demand, do not provide any other possibilities but to change and update the system of Economics by having in consideration all these new developments. The means of international financing as used is limited by its abilities but also by the low market security that does not allow any other approach, thus in order to lower lending rates the market system of economics must change to accomodate the new developments and allow lower lending rates. The size of at the moment capital for investment is not enough to boost the vast global market for a short run accelerated market development, so, not the market security, the approaches of investing, but also the quantities of available capital is short to prompt enough action. The two main targets of Marketism e.d. Market Economics are the full employment (no more than 1% globally) and sustained very limited Inflation/Deflation (no more than 1%) – you can see the huge difference from the Capitalism just in these two measures! To succeed in these targets the economics is split in two levels: the Micro where the self-adjusting is used to ensure balanced markets and the Macro where intervention is required to hold longer term balance: the market tools are used as parameters to accomplish macroeconomic balance.

The Capital on hand for investing and through QE could accelerate market development on a large scale through direct investments and Market Leaps in a more secured market where the Market Agents are implemented and market tools are flexibly used to boost or slow-down market development using the Inflation/Deflation as a trigger point.

Market Agents are strict:

rule of laws in business & unlimited corporate liability

environmental laws

consumer protection laws

labor laws

insurance laws

bonding laws

intellectual property protection

Market Tools are flexible and flexibly used:

foreign direct investment

quantitative easing

SDR

targeted sectors investment

social, educational, R&D, infrastructural expanses

market leaps

low rate lending

subsidies

fiscal policies

sectoral e.d. parts monetary policies

Thus, under strict market condition leeway of mostly financial tools are used to either accelerate or slow-down market forces on macro-level.

The schematic approach to this article is to prove first the inability of the orthodox economics to deal with the new appearing economic developments; second, to present a solution to these new developments, and third, to show the new role of capital into a non-budgetary on macro-level market economics why budgetary on Micro-level such. By splitting the economics on Macro-level on Market Sectors controlled by using Market Tools as Parameters.

Up to now, the trickle-down economics kept firm grip on capital flow made it easy just for Large Corporations & Investors to prevent from supply overrunning demand to prevent from Inflation – a pro-supply approach; now, the market competition is going to be under relatively just opportunity making Small to Medium Businesses & Investors: so it is about alleviation of poverty and Earth preservation while personal liberties and freedoms are preserved as well entrepreneurial freedoms are.

The Mostly Indebted Countries along with the Foreign Direct Investment and the Capital (SDR) introduced by the International Institutions is not even close to required by the necessities for boosting enough business and employment to succeed Property Alleviation that may save Earth from Pollution on a Global Scale. To deal with pollution it is not enough by going green by the most developed markets, instead the entire world must go green. The pollution from one country affects its neighbors as well the global climate – the pollution from old vehicles, primitive heating, deforestation, and improper garbage disposal are becoming the main polluters replacing bettering by technologies manufacturing and energy production. The world have come to a point of great division between the few Rich and the majority Poor that could be individuals, or regions, or countries: technically could be named markets. The tendency to protectionism and stopping the processes of Globalization and rising Productivity may only isolate individual markets/economies. But back to the required Capital for boosting global market development it must exceed the one in hand in great numbers, also the ways direct investment is done must be supplemented by aggressive and targeted market leaps and long term subsidies, law interest investment globally. The FDI is a Market Tool that would continue to be fundamental for market development but it must be supplement in great numbers. The basic improvement in Market Security by implementing the Market Agents would allow Lower Interest Lending to Small and Medium Businesses and Investors that would open countless opportunities for investments and returns. A distinguished independence of investment from governments must be made, when the governments or international finance institutions cannot be collectors or policy intruders to borrowers as it has been practiced, the higher Market Security by itself would instigate proper conditions for collection and stability: this is a general globalization of business and finance.

The current possibilities for global market development are real the globalization and rising productiveness are factors that offset inflationary forces that have brought poverty and inequality for centuries into a new marketplace that provides countless opportunities for development if properly apprehended by economics. Marketism i.e. Market Economics capitalize on these new global developments providing an enhancement of the Capitalism to accommodate the new Century developments into a working economics.

Joshua Ioji Konov 2016

Marketism i.e. Market Economics and Governments

The Marketism is based on firm rule of law in business. environmental, consumer, labor, insurance, and intellectual property protection laws. the Governments under such conditions are obligated to implement and hold these Market Agents in order these markets to deleverage from the current system that give advantage to Big Business and Investors: thus causing increasing inequality, stagnation, declining middle class, and global unrest to more fair competition with higher market security: thus prompting more business activity particularly through the Small to Medium Businesses and Investors. It is a change of priority and powers from the centuries ran trickle-down economics into a market run on a micro and macro levels such: a revolutionary change of the ways societies and markets i.e. economies work. Such changes have only become possible because of the ongoing Globalization, rising Productivity, Chinese Industrialization, and the Internet: factors unknown in the Past that prompted global, exogenous to most markets i.e. economies, forces of industrial overproduction. The Capitalism which is based on such industrial production could not manage these new developing overproduction forces: rising inequality, falling standards of leaving for developed economies and not improving such for the developing economies, and ongoing Earth pollution have invoked from the Capitalism inadequateness that brought back the excessive forces of nationalism, bigotry, chauvinism, religious fundamentalism and finally global unrest: wars, refugees, instability.

The usage of old vehicles, primitive heating devises, the poverty driven world continues polluting, cutting and burning woods, disposing garbage elsewhere are the main sourses of environmental pollution; therefor, to save Earth from destruction elimination of poverty and imposition of environmental protection laws are necessary and paramount.

The Marketism uses market forces on Microeconomic level to boost business activities globally; it is not a Budgetary approach, as all historical systems have been, but connected to Inflation/Deflation variedness whereas Budgets and Investment are rased to an open level to free flowing capital more like the current Stock Exchanges are: with the risk comes the reward; so, it is not any governmental role to protect or control these capital flows – the general rule of law in business incl financing should do the job; for an example: if someone fraudulently breaks the laws elsewhere in the participating markets, he or she will fall under the justice system; the common laws, or personal laws in their current meaning will apply to business laws as well; even though bankruptcy, insurance, and bonding will limit some liability causal of market forces when personal fault is proven no exception to the rule of law should apply. Corporation’s managers or investors, large or small, should have the same liability to the law.

Such market driven system of business will raise market security thus lowering risk for borrowing or insurance coverage thus taking business (financing incl) to some new hights. The governments are not to interfere into business or financing disputes nationally or globally.

Now, the so called ‘invisible Hand’ by the governments becomes very important under these new condition because the markets and investment may not be sufficient to steer enough business activities, and also the Market Tools used differ for individual markets (for example more socialized markets may need less social expenses to boost such business activities than less socialized): an ‘as it comes; as it goes’ Market Economics targets very low unemployment through high business activities under limited Inflation/Deflation by using the Market Tools in any flexible way possible. The Market Tools are FDI, Subsidies, Prevailing Wages, Social incl Educational and Infrastructural Expenses, Quantitative Easing, Market Leaps. The ‘means justify the deeds’ as long the Market Agents are mandatory.

What the Marketism does is taking the level of self-adjusting from Macro to Micro Economic; thus, on a Microeconomic level the markets i.e. economies must self-adjust while on a Macroeconomic the system of using Market Tools as Parameters must persist to prevent from recessions/depressions. The Nash Equilibrium should be used on Macro Level indiscriminately meaning not politically motivated approach. The Central Banks should use any possible way to prevent upheaval! Example is the ways Chinese Central Bank avoided the Real Estate bust by imposing limits on second mortgages and asking for high LTV on the first.

The WTO, WB, IMF must be the frontrunners for opening global markets through implementing the Market Agents and then providing the sufficient capital plus the FDI to succeed accelerated Market Development in all markets. Educational programs, apprenticeships, prevailing wages, maybe necessary to setup and boost business activities.

In recent economics debt is in the foundations of business and equity – state debt limits governments’ expenses, social, educational, infrastructure, policies and international relations – private debt limits individuals’ expenditures, abilities to access better education, housing, and etc; however, ‘credit’ that could fall into ‘debt’ is a main market tool giving governments and individuals the abilities to expand infrastructure, business, equity, and etc using capital, which could not be approachable but by through crediting. The difference between ‘credit’ and ‘debt’ is in the momentum – whereas ‘credit’ is targeted investment considered in motion, a ‘debt’ is a negative after deficiency market imbalance. The distinction between working ‘credit’ and accumulating ‘debt’ is a thin line that could be crossed by global recessions, works of nature, or political turbulence. Between ‘credit’ and ‘debit’ comes public financing – in case the ‘risk’ is taken partially by the investors thus limiting the issuers (could be governments or corporations) liability; however, in cases like “Bond holders against Argentina”,

or “IMF, ECB, Germany and other lenders against Greece” bonds are capitalized into loans and the governments of Argentina and Greece are required to pay these in full.There are many historical occasions when ‘debt’ on countries level was forgiven or let it die in time – Germany after the Second World War and Poland after the fall of Communism are the best example of such …

Yet debt forgiveness has an established historical precedent in Europe. Poland, for example, had accrued external debts of about 57% of GDP by the time the Communist system had collapsed, with the majority of that debt (around $33 billion) being owed to Western governments.Poland’s largest creditor at the time was Germany, which reluctantly agreed in 1991 (under pressure from the United States) to go along with the “Paris Club” of creditor nations and forgive half of Poland’s debt to the West (though this was less than the 80% write-off Poland had originally been seeking).An even more dramatic example is provided by Germany itself. Historically, Germany has been described as the biggest “debt transgressor” of the 20th Century, with restructurings in 1924, 1929, 1932 and 1953. Total debt forgiveness for Germany between 1947 and 1953 amounted to somewhere in the region of 280% of GDP, according to economic historian Albrecht Ritschl of the London School of Economics. Today, Greece has an external debt-to-GDP ratio of roughly 175% (by comparison, Germany’s external debts currently stand at about 145% of GDP).

On individuals or corporate level ‘debt’ has been washed out by bankruptcy procedures – in the US bankruptcy courts are much speedier and over all easier than these in the EU, that some economists consider a main reason for the better way US economy has performed in post 2007-9 Recession times. By giving debtors a second chance bankruptcy courts play some fundamental role in taking individuals and businesses out of the big hole of debt into the market opportunities, thus boosting business and consumption.

The most unorthodox economic approaches to flood capital into underperforming markets is the used by the US, UK, Japan and now EU central banks so called ‘quantitative easing’, while instead of borrowing publicly or privately capital to revive their economies these central banks ‘produced’ such capital from ‘thin air’ into the system.The ‘status quo’ economics predicts that additional capital – such not product of an economy market activities (debit/credit) – would prompt inflation; however, no inflations but deflations have occurred in the post recession times? Neither, the huge debt accumulations by Japan, the US, many EU countries, and others have prompted inflations either! Thus, neither the quantitative easing nor the huge debt has yet created sweeping inflationary forces. In context with the ‘status quo’ economics are the ways government accounting is done by not properly deducting QE from the overall debt even so the capital infusion by QE writes off debt by acquiring issues bonds? In referring to inflationary forces or the lock of it for the last 20 plus years the ongoing Globalization, rising Productivity, China’s Industrialization, and the Internet could be considered causing the increasing exogenous economic pressures over national economies indicated in by their deficit adding to their debt.

The world is crippled by too much debt. The borrowings of global households, governments, companies and financial firms have risen from 246% of GDP in 2000 to 286% today. Since the financial crisis began in 2007, debt-to-GDP has risen in 41 of 47 big economies. For every extra dollar of output, the world cranks out more than a dollar of debt. The Economist explains why the world is addicted to debt http://econ.st/1eaQEgc

As simple as things may look like the results of this system of economics not being able to accommodate these exogenous forces cause fundamental global market imbalances – unemployment, declining middle class, small business and investment, and accumulation of high national debt.[1]

Market Economics employs exogenous market forces and thus capitalize on the 21th Century irreversible developments by not only enhancing the international accounting but further by employing the immense powers these exogenous forces posses to boosting national and global Market Development through alleviation of poverty and environmental Earth protection.The countries debts is considered by Market Economics alike the present corporate and individual debts involving bankruptcy, mitigations, negotiations, and etc; whereas investors take their reward and risk; however, Foreign Direct Investment and Productivity are not considered primary force for global development but supplementary such, because the more important consideration such as Earth protection requires poverty alleviation by not prompting mass industrialization.

The Capitalism uses foreign direct investment by transnational corporations to raise productivity and bring return on this investment that could be only achieved through industrialization, and the global accounting system is setup on these principles;

While the markets are becoming more globalized and productivity is being propelled by ever improving high technologies, some economies as Chinese and Indian are growing rapidly thus becoming real powers in industrial production, however the old “science” of Western Economics is changing very slowly not being able to conceptualize these undergoing changes. The “old” system of Economics firmly believes that:

“The main motivations for the rapid expansion of multinational activity are as follows:Higher profits and a stronger position and market access in global marketsReduced technological barriers to movement of goods, services and factors of productionCost considerations – a desire to shift production to countries with lower unit labour costsForward vertical integration (e.g. establishing production platforms in low cost countries where intermediate products can be made into finished products at lower cost)Avoidance of transportation costs and avoidance of tariff and non-tariff barriersExtending product life-cycles by producing and marketing products in new countriesThe urge to merge – the financial incentives created by the global deregulation of capital markets is making it easier to achieve acquisitions and mergers and thereby encouraging the external growth of a business”

In the foundation of modern days Capitalism are the Transnational Corporations, however the role of these conglomerates is very limited if not negative in solving problems of rising debt, of accelerating genuine poverty around the world and of environmental issues;

Introduction Norms controlling activities of TNC’s in UDHR and ICESCR Why and how these TNC’s are responsible for environmental damages and harms. Three catastrophic disasters in human history International Guidelines controlling TNC’s activities Are these Norms and guidelines are enough to hold these TNC’s liable Need of international binding regulations Recommendations Concluding remarks

Transnational corporation liability for environmental harm

Before starting my presentation on present topic that is transnational corporation liability for environmental harm, I would like to say that this seminar presentation is only an approach paper presenting set of issues involved which in the course of direction take us to the steps of suggestions as far as the TNC’s liability for environmental harms are concerned. Or I can say that this is the first step of my research work.

To begin with let me first briefly explain to you, what TNC’s or MNC’s basically are?

Transnational corporation (TNC), also called multinational enterprise (MNE), is a corporation or enterprise that manages production or delivers services in more than one country. It can also be referred to as an international enterprise.

The Norms specifically define a “transnational corporation” as “an economic entity operating in more than one country or a cluster of economic entities operating in two or more countries– whatever their legal form, whether in their home country or country of activity, and whether taken individually or collectively.” The working group defines the phrase “other business enterprise” as “any business entity, regardless of the international or domestic nature of its activities, including a transnational corporation, contractor, subcontractor, supplier, licensee or distributor; the corporate, partnership, or other legal form used to establish the business entity; and the nature of the ownership of the entity.”

Very large multinationals have budgets that exceed some national GDPs. Multinational corporations can have a powerful influence in local economies as well as the world economy and play an important role in international relations and globalization. It is beyond dispute that TNC’s are now the leading vehicles for economic globalization. According to UN Conference on Trade And Development (UNCTAD). In 2002, global sales of TNC’s reached $18 trillion for world exports.

Throughout the past half century, states and international organizations have continued to expand the codification of international human rights law protecting the rights of individuals against governmental violations. In parallel with increasing attention to the development of international criminal law as a response to war crimes, genocide, and other crimes against humanity, there has been growing attention to individual responsibility for grave human rights abuses. The creators of this ever-larger web of human rights obligations, however, failed to pay sufficient attention to some of the most powerful non state actors in the world, that is, transnational corporations and other business enterprises. With power should come responsibility and international human rights law needs to focus adequately on these extremely potent international nonstate actors.

Transnational corporations evoke particular concern in relation to recent global trends because they are active in some of the most dynamic sectors of national economies, such as extractive industries, telecommunications, information technology, electronic consumer goods, footwear and apparel, transport, banking and finance, insurance, and securities trading. They bring new jobs, capital, and technology. Some corporations make real efforts to achieve international standards by improving working conditions and raising local living conditions. They certainly are capable of exerting a positive influence in fostering development.

Some transnational corporations, however, do not respect minimum international human rights standards and can thus be implicated in abuses such as employing child labourers, discriminating against certain groups of employees, failing to provide safe and healthy working conditions, attempting to repress independent trade unions, discouraging the right to bargain collectively, limiting the broad dissemination of appropriate technology and intellectual property, and dumping toxic wastes. Some of these abuses disproportionately affect developing countries, children, minorities, and women who work in unsafe and poorly paid production jobs, as well as indigenous communities and other vulnerable groups.

It is no doubt that environmental consequences of TNC’s behaviour are multiple and substantial, and here I am going to discuss these environmental consequences of TNC’s.”“Crediting” is a economic “tool” of the Capitalism to allow acceleration of startup businesses and higher consumption, however the “crediting” could properly function in economic growth with short self adjusting recessions but the most recent developments in world economies do not support such consistent gradual development thus “crediting” started bringing negative value instead;

By LAURIE WINSLOW World Staff Writer

Published: 6/17/2010 2:20 AM
Last Modified: 6/17/2010 7:09 AM

Over the last two decades, peoples’ ability to borrow against their homes or run up credit card balances during recessions has helped create an appearance of a safer environment while actually making the economy more fragile.

That is one observation of Mitchell Petersen, professor of finance with the Kellogg School of Management at Northwestern University in Illinois. He spoke Wednesday evening at a private gathering of college alumni at the Summit Club.

Petersen took time before his presentation for a phone interview to talk about some of the more pervasive, and overlooked, issues he believes have contributed to the current economic and financial crisis.

While the most visible signs of the current crisis include falling home prices, increasing mortgage defaults and record unemployment, the seeds of today’s problems were planted well before the housing boom of the last decade, Petersen says.

“A lot of what we call this economic and financial crisis are problems with individuals having too much credit card debt and too much consumer debt,” he said.

Consumer debt was relatively flat through the 1960s and ’70s until about 1983, when the level of debt started to increase, Petersen said.

He noted that the 1991 and 2001 recessions were relatively mild, as consumption dropped a bit. Unemployment never hit 8 percent in the recession of the early 1990s, and it barely got above 6 percent in 2001, Petersen said.

By contrast, the recessions of 1974 and 1981 were
much more severe.

Normally, during recessions of the 1960s, ’70s or early ’80s, if employees lost their jobs, they didn’t have the ability to borrow against their houses because home equity loans didn’t exist and credit cards were scarce.

People decreased their consumption during economic slowdowns and quit buying things, which made recessions more severe coming down. But once people resumed work, they could start buying again, which caused the economy to bounce back, Petersen said.

In later years, however, people who lost jobs could take out home equity loans and run up credit card balances and continue consuming, which led to recessions becoming less severe over the last couple of decades, Petersen explained.

This tendency to borrow when times are tough and then borrow and buy more when times get better causes debt to rise, Petersen said.

“That means that a buffer for rainy day is no longer there so when we have a severe recession like we are in now, our savings essentially have been consumed,” he said.

This ability of middle America to borrow over the last two decades has created the appearance of a “less risky and a safer” U.S. economy, and people in turn have changed behaviors and saved less, Petersen said.

Whereas the average middle American in the 1960s put money in a savings or checking account, today people put it in the stock market, “which is good when it goes up, but a disaster when it collapses because that wealth disappears,” Petersen said.

The shady business policies that worked so well in a capitalism of growth and short time self adjustments when “easy” business was considered kicking off and maintaining economic development has begun provoking negative impact under the new conditions; the lack of business laws and personal liability for the risk management, and the deregulated contract laws is not anymore spearing such economic growth and in the opposite:

A recent study has shown that more than half the small businesses in theUK have to delay payments to suppliers and other parties after being victims of late payment themselves. If you are a small business owner who has been at the receiving end of a customer who keeps deferring his payments, you know how that can disrupt your cash flow. Cracking down on late payments is not easy either, because most small businesses have few clients to start with and have to keep them happy.
Well, there is no foolproof way to ensure you get payments on time, but that does not mean you are completely helpless. One basic rule is to print all terms and conditions on your invoices so there is no misunderstanding between you and the customer. Any delay in payments should be immediately followed up, so ensure you have a point of contact that is always available. The Late Payment of Commercial Debts (Interest) Act of 1998 also allows you to charge an interest on late payments, but be sure to inform the defaulter that you will be charging an interest. Any payment becomes ‘late’ beyond thirty days of the initial payment period, even if nothing was specifically mentioned in the agreement with the client.

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One of the great joys that men in free societies have long enjoyed is the ability to earn an honest wage for an honest day of work. In particular, the amazing capitalist engine that powered the U.S. economy for decade after decade greatly rewarded the incredible hard work and industriousness of the American people. America was known as the land of opportunity, and we built the largest middle class in the history of the world by working incredibly hard. But today, all of that is fundamentally changing. Thanks to rapid advances in technology, and thanks to the globalization of the work force, the labor of American workers is rapidly losing value. Automation, robotics and computers have made many jobs obsolete. Today one man can do the work that a hundred men used to do. Not only that, but today American workers literally have to compete against workers from all over the globe. Global corporations often find themselves having to choose whether to build a factory in the United States or in the third world. But in the third world workers often earn less than 10% of what American workers earn, corporations are often not required to provide any benefits to workers, and there are usually hardly any oppressive government regulations. How can American workers compete against that?

The truth is that labor is now a global commodity. How can an American worker compete against a desperate, half-starving worker in the third world that will work like mad for a dollar an hour?

Though neither by not responding to the very important Environmental concerns and quickly exhausting Earth resources, nor to the poor Wealth Distribution and Redistribution of a deregulated Capitalism that prompted mass Fiscal shortages and poverty proved feasible to get any country out of the Last Global Recession.

The coming catastrophe“Under a cuts-only approach, Social Security recipients would see their cost-of-living adjustments reduced. Medicare premiums would rise, as would the public pension retirement age. The Pentagon would have almost no money for new arms systems or for Afghanistan-scale military operations. All other spending would have to be lowered as a share of GDP. If we simply tax our way out of the problem, Penner said, the total federal tax burden would increase by 50 percent by 2040. Assuming income tax rates rose in tandem until the top rate took half of an upper earner’s income, we’d also need a value-added tax that ramped up to 7.7 percent by that date. Further, Social Security and Medicare taxes would also have to rise. A fiscal cons”

It (the last Global Recession) showed to anyone that if Governments of the Most Developed Nations of US and EU did not intervene by expanding Monetary Quantities (through accumulation of high National debt), pouring capital into Financial Institutions (such as Fannie Mae, Freddy Mac, and AIG) and even financing Individual Businesses (such as GM) their Economies and even the Global Economy could have collapsed under the pressure of the bust after huge Real Estate over-capitalization succeeded in “Trickle-down” Capitalism’s “freedom” of speculations of deregulated business and financial structures, the inadequate system of wealth distribution unable to sustain and raise “demand”.

A German government banking fund is providing an extra 10 billion euros in protection to state-owned bank Hypo Real Estate. The new guarantee comes as markets grow more sensitive about exposure to government debt.

German nationalized bank Hypo Real Estate has received an extra 10 billion euros ($12.3 billion) in public loan guarantees to protect it from renewed market turbulence.

The German government’s bank rescue fund SoFFin said on Friday that it was extending its guarantee level to 103.5 billion euros because of “the current situation on financial markets.”

Fund head Hannes Rehm said that the bank required the guarantees as it carried out a restructuring program.

Any failure of that restructuring process “would have huge consequences for the German economy,”

Other reason and not the least important for the deadly Global Recession of 2007-2009 could be considered the exodus of Industrial Production and related Capital Investment from the Most Developed Countries and Markets such as US and EU into China and India.

Xinjiang attracts nearly 13 billion yuan of external investments in Q1 – “External investments have played a crucial role in spurring economic growth in Xinjiang Uighur Autonomous Region. Xinjiang attracted nearly 13 billion yuan of external investments in the first quarter of 2010, up nearly 46 percent from last year, marking the highest quarterly growth rate of paid-in investments since the global financial crisis.”

In the past, Social expenses where contra productive for maintaining Economic growth, thus Economies of most socialized countries such as of these of the Eastern Block and then China and India (of the Early and Mid Sixties, Seventies) were not able to keep up enough “supply” to balance the “demand” for goods and services, however with the ongoing Globalization and rising Productivity, supported with huge Capital the system of Social Wealth Distribution is becoming more economically adequate as the economies of China, France, Germany, and in its own ways Japan have showed. These countries were able to overcome the Global Recession by having better then US Social Systems for Wealth Distribution.

After the fall of the Eastern Block and the China’s entering into WTO the Globalization stepped on to establish economic conditions for incredibly fast industrialization of China and now of India; very accessible and easy movable highly technologically advanced industrial equipment for manufacturing combined with already highly capitalized US financial markets leering for ROI found prospective on vastly populated Chinese marketplace (of educated and skilled labor) to move industrial production, outsource and invest huge capital into industrial production and related technologies.

India’s Rising Thirst
UCLA economics historian Robert Brenner makes the case that the current economic unrest is due to global overcapacity and not financial shenanigans. Essentially, he believes the world is able to produce far more goods than it logically needs. As a result, profits will continue to decline until a permanent solution is found to remedy this overcapacity. What are investors to do? One strategy is to find companies participating in markets with a pent-up demand for a product or service. A good example is India and the liquor trade. According to United Spirits, which is the second largest company of its kind in the world, over 50% of India’s 1.2 billion population has yet to reach legal drinking age. You don’t have to be a genius to see the unlimited potential of selling liquor in India. If only 10% of those currently underage take to drinking, we’re talking about 60 million people. That’s almost twice the population of Canada. We’ll look at what public companies are doing in the world’s second most populated country.US, China announce anti-dumping steps“(AP) — BEIJING – The United States and China have announced new anti-dumping steps against each other over aluminum, nylon and optical fiber, possibly reviving strains over trade and currency that had eased in recent weeks.”

In the Sixties and Seventies a similar to the Chinese and Indian industrialization was experienced by Germany and Japan, however the vastness of the Chinese and Indian Economies and Marketplaces were not remotely matched by German and Japanese Economies and Marketplaces therefore to suggest that most recent Globalization and Industrialization was ever historically experienced is not feasible.

These “system-internal” organizations can be distinguished from their “system-external” counterparts not only because they number among the state and collective forms of ownership, but also because they assume numerous socioeconomic and work-related functions in order to attain various objectives.the majority of political, economic, social, and work-related resources as well are also redistributed via the work units. Monopolistic control and distribution of various resources in conjunction with a corresponding attitude of expectation in the unit””s members may provide individuals with a sense of security and assurance, but at the same time create a strong dependence on the respective work unit. Thus mechanisms for social integration as well as social control are established. In other words, authority is exercised on the basis of monoplistic control and distribution of resources; this makes it possible for the will of the authority to be imposed on material, political, and ideological levels, and for obedience to be compelled. In contrast, “systemexternal” organizations must use the persuasive capacities usual for that culture as well as legal means as the main ways of imposing the will of the authority.

“China will adjust its monetary policy in accordance with changes of economic indicatorsand feedbacks from policy implementation, said central bank governor Zhou Xiaochuan Saturday.
Zhou made the remarks at a press conference held on the sidelines of the annual session of the National People’s Congress (NPC), the country’s top legislature.
China targets a rise of consumer price of around 3 percent this year, according to the government work report delivered by Premier Wen Jiabao Friday.

“It’s difficult for us to anticipate all the possible scenarios and changes in indicators. Therefore, our plicy will be adjusted according to changes in economic indicators and feedbacks from implementation,” said Zhou.“We are going to continue with a moderately easy monetary policy but at the same time closely follow inflation and changes in other economic indicators,” he said, noting that inflation control will be very complicated this year.China will enhance the focus and flexibility of the policy according to new conditions and strike a balance between inflation expectation management and maintaining a sound growth, he said.”these countries are manipulating markets to maintain sustained development and they are succeeding on an unimaginable scale.Peg is dead as China vows yuan flexibility before G20 “This is an important move as it signals recognition by Chinese officials that a more flexible exchange rate is in China’s own interest and also acknowledges its responsibility to the international community,” said Eswar Prasad, a former head of the International Monetary Fund’s China division. China has long said it would not bow to international pressure over its currency, and the central bank went out of its way to dampen expectations for any big yuan rise.
“We believe this is a positive gesture, suggesting the yuan will soon resume its appreciation against the dollar,” said Goldman Sachs economists Yu Song and Helen Qiao.The news could also ease fears of a trade dispute between the United States and China at a delicate time for the world economy and may propel world stocks markets higher on Monday.It was clear that China intended its announcement — published in English at around the same time as Chinese, a departure from usual practice — to mark the end of the yuan’s de facto peg to the dollar. That had been defended as a special protection policy during the global financial crisis.”The global economy is gradually recovering. The recovery and upturn of the Chinese economy has become more solid with enhanced economic stability,” the Chinese central bank said in a statement on its website.”It is desirable to proceed further with reform of RMB exchange rate regime and increase the RMB exchange rate flexibility,” it said.China has held the yuan at roughly 6.83 to the dollar since July 2008 in an attempt to insulate the fastest-growing major economy from the turmoil sparked by the U.S. credit crunch.

China’s Barbie Doll EconomicsOft-quoted, Dong Tao, a heavyweight economist at UBS in Hong Kong, once said: “A Barbie doll costs $20, but China only gets about 35 cents of that.” He was talking about global trade statistics at the time, but that proclamation might help explain why Chinese companies are increasingly shopping for and successfully acquiring storied brands, most recently, Ford’s Volvo.The lesson: the big money is in owning the brand, not just making it for foreign companies, writes the AP’s William Foreman.

Capacity (Equity) building as a China’s National Policies is a balance between Free Enterprises rising Productivity and Social and Fiscal Policies and Infrastructure

Equity, capacity and sustainability “The concept of equity in the context of capacity building is not sheer ethical. It”s mixed with certain practical social and economic meaning, therefore inseparable from sustainability.Equity here contains three folds of meanings: 1) equity between existing generation and future generations; 2) Equity between different social members under the same generation; and 3) Equity in responsibility and obligation that different social members or groups have to achieve sustainable development.

Equity between generations, to much extent, is subject to ethical area. The current generation, in moral sense, should avoid “eat rice from ancestors while break future generations”pot”. They have no right to overconsume and damage natural environment and resources that the future generations will live in. This point was made very clear in the World Committee on Environment and Development Report. In its definition of sustainable development, that not to harm the future generations to meet the need of their own was established as a condition. Although capacity building of the current generation is helpful to equity between generations, this equity however is not the most important problem to solve in the area of capacity building.

The equity between different social members under the same generation is closer related to sustainability. On the one hand, from the perspective of social justice, it”s necessary that the society takes into consideration the poor”s interests so as to reduce the gap between the rich and the poor. This was emphasized in the Brundland Report. That is, The basic needs of the poor in the world should be put at the top priority. On the other hand, equity between different social members under the same generation is also a condition to sustainable development. It seems that there is not much connection between equity and sustainability, or not so direct. However by some analysis, can you find that different social members”unequally possession of the resources is an important reason for difficult sustainable development.This is because that even though the society in general is rich in resources averagely speaking, yet the gap in term of resources possession will force the social members short of resources to overuse or abuse their limited resources to make a living. Since the environmental problems are interrelated and intereffected, some part of unsustainability in the society will likely lead to an overall sustainability. Therefore, equity is also a condition to the sustainable development process.

Sustainable environment and equity of social responsibility and obligation have been an issue that developed countries and developing countries keep debating on. Who has polluted the environment? Who is making the environment worse and worse? This is an issue of responsibility and obligation. Even though it”s an issue of equity between different social members or groups under the same generation, in essence, it”s a practical issue in international politics and economics. However, even if every social member or group is willing to assume the obligation, does he have the capacity to realize the commitment? There you find that equity, capacity and sustainability are closely related with one and another.”

State Employment is used as a balance for higher wages in Non State Employment instead of used by the Economics of Capitalism (mostly and only) Employment Market Forces.

Ⅲ. The Institutional Transition Under the Dual Labor Market

From our analysis of the features of employment absorption and wage determination in the two parallel urban labor markets we can make the judgment that the labor market in the newly established sector determined by market forces represent the future direction of development. In other words,the process of transformation from the SOE”s employment system to NES”s is the process of the formation of the labor and wage system of the market economy. How will this system transition take place? Since the two systems of labor and wage in the two kinds of sectors dominate their respective labor market, the competition for laborers between these two kinds of enterprises and therefore the expansion of one labor market and the reducement of another will realize the transition from one system to another. This is the first form that the transition of employment system will take. In the process of expansion and reducements of the two labor markets, caused by the competition between the two kinds of enterprises, the traditional system of the state sector will respond accordingly, namely by introducing reform in order to survive in the competition and shift to a market economy. In this way the second form of system transition takes place.

First, we will look into how the first system transition that is characterized by employment transfers between the two kinds of enterprises occurs and the features of its transformation. If we suppose the urban labor market is closed off for outsiders, laborers are distributed merely between the SOEs and NESs. Chart 1 indicates the competitive relations between these two sectors as well as the process of expansion and reducement of the two labor markets.The horizontal axis stands for the labor volume. From O1 to the right, the labor volume of the SOEs can be measured; from O2 to the left that of the NESs can be measured. The domain between O1 and O2stands for total supply of labor. The vertical axis stands for the marginal productivity of labors or the wage level. The curve tilting downwards from the right to the left is the curve of marginal productivity of labors in the NESs. It tilts because their marginal productivity of labors decreases with the increase of the employed labor”s size. At the same time, the marginal productivity of labors in the SOEs increases with the number of workers leaving their enterprises.Thus, the curve tilting downwards from the left to the right is the curve of marginal productivity of labors in the SOEs. The curve that is steeper, is the curve of marginal productivity of labors in the SOEs under the assumption that their wage level is determined by the market (see name in quotation marks). In this situation, this curve intersects at the point A with the curve of the marginal productivity of labors of NESs during their employed labor volume expansion. This means the wage level of the two kinds of enterprises are equal to the point Wa, and the expansion of labors”volume in NESs no longer continues. Then the labor”s volume in the SOEs is O1A while that of NESs is AO2.

Since the SOEs are overstaffed and wage is not determined by the marginal productivity of labors, however, their curve of marginal productivity should be more flat (might be a horizontal beeline without elasticity), i. e. the curve whose name is without quotation marks that intersects at the point B with the curve of the marginal productivity of labors in the NESs. It is at this point that NESs stop expanding their labor volume, here the wage rate is Wb. As the wage is determined institutionally NESs need to pay higher wage to attract laborers; and the transformation of the laborers from the SOEs to NESs becomes smaller. In the real laborer”s distribution, the laborer”s volume employed by the SOEs is O1B instead of O1A, that for newly established enterprises is BO2 instead of AO2. So the NESs are limited by their ability to pay higher wage, the difference between labor volume they really employ and that they should employ is indicated by the distance between A and B in the chart.

Chart 1 Labor Transfers between Two Sectors

Our theoretical analysis reflect the reality of transformation of laborers between the two sectors. One characteristic of NESs is very labor intense. It is not feasible for NESs to pay very high wage to attract employees from SOEs if NESs are to keep their advantage in laborer”s resource. So competition of employment is limited by the scope of their ability to pay high wages. Within this scope, however, NESs can certainly attract relatively high qualified workers to form the backbone of their enterprises without taking cost into account. As it is not possible for the NESs to obtain all the laborers they need from the state sector it is necessary to have other channels to find labor. If NESs had not have other such channels, this sector would not have been able to develop to the present stage.

Our analysis above was made under the assumption that the urban labor market was closed off for outsiders, in our further analysis we will give up this assumption. NESs obtain highly qualified workers from the SOEs by paying higher wage in order to satisfy their needs for technology. The other source is laborers with common skills from the rural areas.

China has discovered that globalization and international competition work in its favour.

Great exportations “China overtakes Germany to become the biggest exporter of all” “CHINA’S rise has long appeared inexorable. Despite a decline in total world trade, China has seen its exports fall less than those of other big powers. A new report by the World Trade Organisation calculates that the total value of merchandise exports fell by a staggering 23% in 2009. Among the top ten exporters, Japan’s shipments were worst affected (falling by 26%). Although China’s exports also fell (by 16%), the contraction was less painful than in Germany (down by 22%). As a result China is now the single largest exporter. The global downturn has helped to reduce global imbalances; the leading three exporters accounted for 26.7% of total world exports in 2009 down from a third of the total in 2008. The WTO expects trade to rebound by nearly 10% this year.”

The Real Reason China Resists on the RMB“As I see it, China is asking a question to which there is no easy answer; what right does the US have to lecture anyone on economic matters now, having played so large a part in causing the current global recession through loose monetary policy, poor risk management by some of our most prestigious companies and monumental regulatory failures? They are responding to the continued US belief in American exceptionalism, that we can do whatever we do, right or wrong, and ignore the criticisms and demands of other countries who often bear the consequences of our actions, while we continue to insist on our right to criticize and make demands on them. As Brad Delong and Stephen Cohen have pointed out, the US simply no longer has the economic clout to get away with this any longer, and who better than China to stand up to it?

The problem of the Rest of the World is the ideological almost blind following of Marx’s’ “Das Kapital” financial system controlled by the rules of “trickle-down” Capitalism that happen to be quite impractical even when this system built North Americas, Great Britain, France and Germany: Great Powers envied by anyone in the World, however looking in History things sometime have to change; it happened to Rome, Persia, Victorian Empires, and etc., thus change could be considered as ongoing now affecting different countries and markets in different ways, but the trend is quite similar ( In the Worlds short term history: once mostly agriculturally driven GDP changed into mostly industrial production driven GDP, now to change into mostly “artificially” balanced “Demand-to-Supply” Market Economics GDP).

If these new developments of Globalization have harmful effect on the Most Developed Countries of North America, France, Germany and Japan to the rest of the World their effect is deadly: rising national debt or genuine poverty are everywhere: Latin Americas, Africa, Eastern Europe, and elsewhere;

Credit Swaps at Record High as Greek Debt Crisis Infects Europe“April 27 (Bloomberg) — Credit-default swaps on European sovereign debt surged to records on concern that Greece’s fiscal crisis is starting to hurt the borrowing ability of indebted nations throughout the region. Contracts tied to Greek government bonds climbed 54 basis points to 764, Portugal rose 38 basis points to 349 and Spain increased 16 basis points to 204, according to CMA DataVision. Yields on Greek two-year notes surged above 15 percent, the highest since at least 1998, on concern bondholders will be forced to take losses as the country grapples with the highest debt ratios in the European Union.

IMF warns against Japan’s fiscal deterioration“WASHINGTON — A top official of the International Monetary Fund on Sunday warned against rising vulnerability in Japan’s fiscal conditions amid snowballing public debts and called for an accelerated effort to put the nation’s finances in order. ‘‘Although Japan’s problem should not be treated in the same way as the Greece debt crisis, its fiscal vulnerability is rising fairly high,’’ IMF Deputy Managing Director Naoyuki Shinohara said in an interview with Kyodo News.” Japanese fiscal deficits have been financed by the nation’s high savings so far, but the pace of fiscal deterioration is ‘‘pretty high,’’ Shinohara said.”

Greek budget deficit 13.6 percent of GDP in 2009“(AP) — LONDON – Financially-stricken Greece had an even bigger budget deficit for 2009 than previously thought, official figures showed Thursday-at a time the country is considering whether to tap a bailout facility from its 15 partners in the eurozone and the International Monetary Fund.”

Greece, Portugal, Spain, and Bulgaria are among many economically struggling to couple with ever lack of Fiscal and Monetary quantities countries: to maintain the rising productivity of Germany, Japan and China or to industrialize themselves is just futile so they are cursed to high National Debt like Greece, Portugal and Spain or to high Poverty like Bulgaria whose Government was “hired” by the World Bank and IMF to maintain strict financial order:

World Bank, IMF end Spring Meetings with solid step in voice reform“The World Bank and the International Monetary Fund (IMF) ended their Spring Meetings in Washington on Sunday, with a solid step in the long-expected voice reform, a cautious note on exit strategy and a call for global cooperation amid uncertain recovery prospects. STRIDES IN VOICE REFORM The meetings approved a plan to increase the developing countries’ voting power in the International Bank for Reconstruction and Development (IBRD) by 3.13 percentage points to 47.19 percent, representing a total shift of 4.59 percent to developing and transition countries since 2008.”

Rating Agency Data Aided Wall Street in Mortgage Deals“In essence, banks started with the answers and worked backward, reverse-engineering top-flight ratings for investments that were, in some cases, riskier than ratings suggested, according to former agency employees. The major credit rating agencies, Moody’s, Standard & Poor’s and Fitch, drew renewed criticism on Friday on Capitol Hill for failing to warn of the dangers posed by complex investments like the one that has drawn Goldman Sachs into a legal whirlwind. But while the agencies have come under fire before, the extent to which they collaborated with Wall Street banks has drawn less notice.

U.S., EU call on Tokyo to ensure fair competition against Japan Post TOKYO —“The Japanese government has received a letter from the United States ambassador and his European Union counterpart calling on Tokyo to ensure fair competition when revising the nation’s postal privatization plan, Chief Cabinet Secretary Hirofumi Hirano said Friday. In the letter, U.S. Ambassador to Japan John Roos and Hugh Richardson, ambassador and head of the delegation of the European Commission in Japan, are believed to have claimed that Tokyo’s plan on raising the deposit cap on Japan Post Holdings Co’s banking unit may breach World Trade Organization agreements.”
Commentary: This is very suspicious to say the least. As the international criminal bankster gangsters enrich themselves by creating havoc around the world(Greece, Ireland, Iceland, Spain, Italy, Portugal, US,)and get countries under their control, a national safe haven for savings is very important.US ans EU are claiming unfair competition because Japan wants to enable a safe haven for people’s savings. Japan, hold strong to your national sovereignty, do not let these criminal scumbags and there New World Order agenda in. World Trade Organization creating problems and enriching those at the top through neo-mercantilism.”

However neither of these two approaches (the one that Governments keep raising National Debt nor the one which Governments maintain strict Budgetary austerity) happen to bring “prosperity” to these countries: “high deficit” or “financial austerity” both are not going to make Spain, Portugal and Greece nor Bulgaria “industrial powers” thus they could cover their ever arising Social Expenses and Infrastructural Deterioration to ever shrinking Fiscal Reserves.

Profit of Bulgarian Banks Down by 37% in 2010 Q1 “The profit generated by the Bulgarian banking system in the first quarter of 2010 amounts to BGN 170 M, which is a 37.2% drop year-on-year. At the same time, however, the profit of the Bulgarian banks grew by 7.5% in January-March 2010 compared to the last quarter of 2009, showed data of the Bulgarian National Bank released Thursday.

Fed chief: Joblessness, housing still problematic Despite a more stabilized economy, he says, the U.S. is “far from being out of the woods.” “WASHINGTON — Problems in the housing market and high unemployment are the biggest economic challenges the nation faces, Federal Reserve Chairman Ben Bernanke said Wednesday. After suffering through the worst recession since the 1930s, the economy seems to have stabilized and is growing again, Bernanke said. But he warned: “We are far from being out of the woods. Many Americans are still grappling with unemployment or foreclosure or both.” In prepared remarks to business people in Dallas, Bernanke said he saw no evidence of a “sustained recovery” in the housing market, noting that foreclosures keep rising. Commercial real estate remains a trouble spot, too. The toughest problems are in the job market. Even though layoffs have slowed, hiring is “very weak,” Bernanke said. He noted that unemployment, now at 9.7 percent, is still close to its highest levels since the early 1980s.”

ADDRESSING THE PARALYZED HOUSING MARKET“Some in the US (especially the democrats) have been calling for a housing stimulus bill that will help the struggling home owners stay in their homes and also stop the house prices from falling further. President Obama recently announced an expected plan to fight a deepening housing crisis by committing up to US 275 billion to stop the wave of foreclosures sweeping the US. The plan aims to help around 9 million American families. Under the proposed plan a US 75 billion fund will be formed to reduce the monthly payments for homeowners and provide them a buffer of up to $ 6,000 against any decline in the value of the houses. The treasury will also agree to double its financial aid to Fannie Mae and Freddie Mac enabling them to play a bigger role in supporting the housing sector. The aim is obviously to increase the confidence in Fannie and Freddie ensuring the strength and security of the mortgage market and to help maintain mortgage affordability.
G20 sounds warning note over new bank rules “One of the lessons of the crisis is that facing global challenges we need to have global answers,” IMF Managing Director Dominique Strauss-Kahn told the Romanian parliament during a flying visit to Bucharest. “This lesson is about to be lost,” he said. The IMF chief said individual countries were working on new regulations and creating new supervisory bodies. “The only problem is, they don’t fit together,” he added. The G20’s steering countries said in a letter to all group members that governments must recommit and deliver on reforms they agreed to in Pittsburgh.”We all have a mutual responsibility to deliver on all our commitments to address the weaknesses that led to the financial crisis,” the letter said.”This will require that we maintain our vigilance to address the required reforms and guard against complacency as our economies recover,” it added. Bank of England director of financial stability Andrew Haldane said it is possible that no amount of capital or liquidity will be enough to totally shield taxpayers as profit incentives may place risk one step beyond regulation. “That means banking reform may need to look beyond regulation to the underlying structure of finance if we are not to risk another sparrow toppling the dominos,” Haldane said. PAY RULES PATCHY But G20 leaders said there can be no let-up on efforts to agree a new set of bank capital and liquidity rules — dubbed Basel III — for implementation by the end of 2012. They singled out the need to still include a leverage ratio or cap in Basel III as some countries like France have expressed concerns about its impact. The letter also said all countries must have adopted the existing Basel II bank capital framework by 2011, a reminder to the United States which has yet to implement it in full. They also reiterated the need to regulate over-the-counter derivatives by the end of 2012 and implement the G20’s principles aimed at curbing big bonuses for excessive risk- taking at banks. The Financial Stability Board, tasked by the G20 to implement its regulatory pledges, said several countries have yet to fully apply the remuneration principles. They were agreed in part to help quell public outrage at the return of big bonuses in a sector that had to be shored up by taxpayers during the financial crisis. “Firms will need to maintain momentum toward reforming their compensation practices through 2010 and beyond,” FSB Chairman Mario Draghi said. Many of the major financial centers like the United States, Britain, Germany, France, Japan and Hong Kong have taken the regulatory or supervisory steps needed to implement the code. Argentina, Brazil, Singapore, India, Indonesia, Mexico, Russia and Turkey lag, the FSB said.

Sarkozy urges new world finance rules in US speech“Sarkozy wants the United States to champion firm regulations of financial systems, from tax havens to hedge funds. His ideas were shared by many in the immediate wake of the financial crisis but momentum for dramatic changes has since slowed. “We should invent a new global monetary order,” he said Monday, insisting that new regulations would “save capitalism.”

Impossibility for many countries to industrialize joined by constant lack of capital means “no solution” under the control of the World Lenders (World Bank. IMF, WTO) that “control” their borrowers tightly.

Could not be denied that some of these less developed countries might have corruption, improper bureaucracy, insufficient markets, and etc. but whatever WB and IMF could present as reasonable for lack of development: the ongoing processes of Fiscal shortages for these and many other countries are to be unavoidable: and because most of the World economies are 80%+ based on consumption these countries lower life standards prompt weak market demand boomeranging back to the Most Developed Industrial Countries’ export and so it goes on and on.

Unless in the Past, these new conditions of decreasing industrial production, following consumption and demand affect US, many countries in EU, and the rest of the World in a very harmful ways seen at the Last Global Recession.

U.S. rebound on good footing: Fed’s Fisher (Reuters) – The U.S. economic recovery is gathering speed as business activity picks up pace, despite lingering weakness in employment, Dallas Federal Reserve Bank President Richard Fisher said on Tuesday.

Alternatives to appreciating the Chinese yuan“Recent debate has focused on how to increase US exports and savings and increase Chinese imports and consumption in order to correct the trade imbalance between the US and China. In America in particular, focus has been placed on Chinese exchange rate policy. American leaders would like the RMB to appreciate significantly and quickly. They hope that this would lead to an increase in US exports and employment.”

H-man – Thursday March 04, 2010 08:06AM EST “I was a manufacturing executive for the past 30 years. I directly observed our manufacturing base disassembled and outsourced. The pace only increased and unfortunately continues unabated. The manufacturing jobs sent out of the country were much better paying than the service jobs that replaced them. The bottom line is now Americans can no longer just “BUY AMERICAN” and don’t have the $ to do so anyway. Greed (Corporate, Political, Individual) has killed the Amercian Dream.

The New Poor “Economists fear that the nascent recovery will leave more people behind than in past recessions, failing to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed. Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come.”

America tied-up by Record Debt“Smoothing out the economy’s ups and downs, however, has a cost which is now tying America’s hands. At this time when fears of a double-dip recession are rising, it’s an obvious moment for the government to apply more stimulus spending as it has in the past. But the U.S. finds itself more leveraged than ever before, limiting its options.”Small businesses need a disaster plan — and plan B(AP) — NEW YORK – Small business owners in the Upper Midwest have just gone through a disaster preparation drill as the Red River rose and threatened to repeat last year’s catastrophic flooding. The region dodged a bullet this time, but more floods may well come, and other parts of the country could see tornadoes and hurricanes. Disaster preparation is one of those tasks that many small business owners say they’ll get around to, soon. But it often gets pushed down the priority list, especially when a company is focused on bringing in new business or improving cash flow.

President Obama is doing a lot of positive economic actions in attempt to revive US economy: currently signed in laws Health Reform, imposed support for homeowners mortgage defaults, financing SMB and helping Student Financing are moves into a right direction. In regard Wealth Distribution by following the last Global Recession facts are showing indiscriminate link between using Social and Infrastructural Expenses as Economic “tools” for balancing “demand-to-supply” ratios. Such trend could be changed by using an enhanced Stock and Commodities Exchanges regulated structures that would be sufficiently allowing Small to Medium Investors to invest Globally and to be able to profit from thus going Global growth: the ROI (return on investment) such SMI (small and medium investors) could become Market driven ways for Wealth Distribution; Other Market related ways for such Wealth Distribution could be by imposing common Global Markets’ regulations (for making SMB equally competitive to the Large International Corporations) , enhancing Business Contracts and Bonding Laws, enhancing Intellectual Properties laws and Risk Management Personal Liability laws to prompt SMB Global expansion.

President Obama has a few key economic messages for the world: China needs to buy more stuff from other countries; Europe (and the U.S.) shouldn’t be too hasty in the push for austerity; and banks need to hold bigger rainy-day funds.

The letter doesn’t mention China by name. But it includes a passage that clearly applies to China.

For years, the U.S. has imported more than it’s exported, while China has done the reverse. Obama writes:

A strong and sustainable global recovery needs to be built on balanced global demand. … I am concerned by weak private sector demand and continued heavy reliance on exports by some countries with already large external surpluses.

This is followed by a bit that’s aimed at China’s policy of tying its currency to the dollar. U.S. officials have called for China to allow the value of its currency to fluctuate. That would make U.S. goods cheaper for Chinese consumers. (It would also make Chinese goods more expensive for U.S. consumers.)

… I also want to underscore that market-determined exchange rates are essential to global economic vitality. The signals that flexible exchange rates send are necessary to support a strong and balanced global economy.

Elsewhere in the letter, Obama addresses Europe and the U.S., when he argues that governments shouldn’t cut spending too quickly:

We need to commit to fiscal adjustments that stabilize debt-to-GDP ratios at appropriate levels over the medium term. … But … we must be flexible in adjusting the pace of consolidation and learn from the consequential mistakes of the past when stimulus was too quickly withdrawn and resulted in renewed economic hardships and recession.

Finally, he argues for a few reforms of the global financial system. This section of the letter is pretty general.

On one key subject — how much money banks should hold in reserve, and what form that money should take — Obama basically says banks should hold bigger cushions, but doesn’t get into specifics:

We want our negotiators to reach agreement on a new capital framework … that will include higher common equity requirements, tighter definitions of capital, a simple mandatory leverage ratio, and appropriate liquidity requirements.

Update: Thanks to the commenters who pointed out the typos in the post. They’ve been fixed.

Dearths of funds and delayed payments have forced the Micro and Small Enterprise (MSE) sector to perform below capacity, a study conducted by the industry lobby ASSOCHAM said Sunday. “Most of the MSEs are running at close to 70 percent capacity utilization due to paucity of funds, arising out of unduly delayed payment of their dues, resulting in serious suffocation,” says the ASSOCHAM study.

Mutual fund workers get whistle-blower cover: judge(Reuters) – A U.S. law protecting whistle-blowers at publicly traded companies also covers mutual fund firms, a federal judge ruled in a case involving two former Fidelity Investments employees.

Greek turmoil puts pressure on markets as loan costs soar: “The yield or return on Greek 10-year bonds topped 7.5 percent for the first time since Athens adopted the euro in 2001 but later came back to 7.35 percent — still more than double the rate on the German 10-year bond at 3.09 percent. Finance Minister George Papaconstantinou said Athens “is borrowing and will keep on borrowing” despite the record high costs imposed by financial markets.

U.S. Stocks Retreat as Iceland, Greece Temper Economic DataMarch 30 (Bloomberg) — U.S. stocks retreated as concern that deteriorating government finances will derail the global economic recovery overshadowed better-than-estimated reports on American consumer confidence and home prices. Citigroup Inc., Goldman Sachs Group Inc. and Bank of America Corp. lost more than 1.6 percent as Standard & Poor’s cut Iceland’s credit rating and Greece failed to sell half the 12-year bonds it offered. Exxon Mobil Corp. and Chevron Corp. retreated as oil declined after yesterday’s 2.7 percent rally. Stocks also fell after London-based Gartmore Group Ltd. suspended the manager of its two biggest hedge funds amid an investigation.

Ten Years of Pension Reform in Bulgaria:Achievements and ChallengesThese are difficult times for Bulgaria, Europe and the world. For more than ten years the World Bank in Bulgaria has been a steady partner, supporting reforms in the area of social security and pensions, both in terms of investing in the modernization of the social security administration and in terms of analytical support to ensure fiscal sustainability of the pension system – and we are delighted to respond to the Minister’s request for continued support and work with all partners towards an effective, just and sustainable pension system.

Government aims to boost sluggish export growth” The Economy Minister rejected recent criticism of Germany’s export boom voiced by his French counterpart Christine Lagarde. Last week Lagarde argued that Germany’s huge trade surpluses with countries in Europe had created imbalances that were partly responsible for the budget problems in Greece and other EU nations.”Such criticism is unfounded,” Bruederle said. “Germany’s exports are increasingly becoming a motor for the economies of other European Union countries to overcome the crisis.”

Greece: It’s a DealFrance and Germany have brokered an emergency financing mechanism to help Greece, following extensive bilateral negotiations between the two sides earlier on Thursday (25 March). Under the deal, approved by eurozone leaders after late evening talks, a funding package will be created, made up of voluntary contributions from euro area countries and cash from the International Monetary Fund.
The Pain in Spain: An Economy in Crisis “JesusManson323 Spain is a leech economy. Much of its “new economy” is just Bernie Madoff-style banking sucking blood out of Latin America. It really says something that Spain did NOT start Europe’s Industrial Revolution, despite being an early colonial power that imported massive amounts of gold and silver from North/South America.”

Some Latin Currencies May Be Too Strong
“That will be a big challenge, because right now the region gets only 2 percent of the world’s overall investments in research and development, compared with 28 percent received by Asian countries, according to RICYT, a region-wide science and technology research network. While China invests 1.4 percent of its gross domestic product in research and development, Brazil is investing 1 percent, Argentina 0.6 percent, Mexico 0.4 percent and Colombia and Peru 0.1 percent, respectively, RICYT says. Even more worrisome, the bulk of Latin America’s investments in research and development are state-funded projects on theoretical issues of no commercial value. Consider this: While South Korea registered 80,000 patents worldwide last year, Brazil registered only 580, Mexico 330, and Argentina 80, according to the World Intellectual Property Organization.

Industrial Production moved to the Fast Developing Vast Countries as China and India

India, China to Reap Reward of Global Power Shift, “Roubini SaysThe size of the emerging markets is going to become larger and larger, and it’s going to become greater than the GDP of the United States,” Roubini said. “It may take 20 to 30 years, depending on relative economic growth, but the process will occur” and “we should get used to it.”As the U.S., Europe and Japan struggle to recover from the worst recession since World War II, India’s main stock-market index has soared over the last 12 months and its economy may grow 8.2 percent in the year starting April 1, the fastest in two years, the Finance Ministry said in February. Chinese gross domestic product grew 10.7 percent in the three months through December, the quickest pace since the fourth quarter of 2007.“China has been a hare and India a tortoise but growth is accelerating in India,” Roubini said. Emerging markets are set for a V-shaped recovery, even as India still has a “massive” need for human and financial capital as well as economic-policy changes to achieve double-digit growth like China, he said.

It’s China’s World We’re Just Living in It“It’s easy to forget that big international bodies like the IMF and the World Bank were created by just a few nations, led by the United States. These economic organizations have global reach, but that globe used to be dominated by the American superpower, and their policies were suffused with U.S. values. When Beijing was a small-stakes player its leaders didn’t always like the setup, but they lived with it, even facing down fierce grassroots opposition to join the World Trade Organization. But now China has more worldwide clout, and public opinion at home has taken on a combative (and sometimes downright jingoistic) tone. So with one eye on China’s national interests and the other on domestic critics accusing the regime of “coddling” the West, Beijing has begun to push harder to reshape international systems to make them more China-friendly (and, in the process, to raise the regime’s chances of survival).

China Exports Soar 45% Growth” CHINA reported Wednesday exports soared for the third straight month in February. The fastest pace in three years as most analysts believe it could leave Beijing more open to a stronger yuan. Overseas shipments grew 45.7 % on-year last month to US$94.5 billion, the China customs bureau announced. The consistent data cements a turnaround that began in December when a year-long”

The success of China and India is not because of the cheap labor only: such cheap labor could be found around the Globe, neither it is because of the vast population only: as a whole South America counts about 400M but could not succeed consistent economic growth, nor because of “right time in history”: for the last 20 years number of recessions have plagued the World Economy (1999,2008 deadliest ), hence, why these countries succeeded in economic growth even when recessions were ongoing?

Countries with very strong Social policies and Wealth distribution and redistribution? – Maybe just because in the modern Capitalism the biggest problem is Wealth distribution and redistribution, maybe because they ignored following the taboos of “trickle-down” economics and used flexible economic policies “as it comes as it goes”, maybe because the Great Industrial Nations of US, Japan and some in EU were not flexible enough in adjusting their Economic policies to succeed Economics growth, maybe because the Big Internationals and Big Inverstors moved to China and India as a better choice: ther consistent at the same time flexible economic policies, social stability, vast population, work ethics and discipline, or finally, may be because China and India pretty much ignored the Parish Club, the World Bank and the IMF in the ways they conducted their Economic Policies: supported by strong foreign investments they changed the rules of the economic game “as it comes: as it goes”: example is the devaluation of the Chinese Currency, the strong business and financial laws against Corporate Risk Management fraud, and etc.

“Industrial output in February grew at a slower rate of 15.1 percent, official data showed on Monday. The production in January was 16.7 percent. The index of industrial production (IIP), which measures factory output, stood at 10.1 percent during April 2009-February 2010 against 3 percent in the same period of 2008-09, data released by the Central Statistical Organisation showed. While basic goods grew 8.4 percent during the period under review, capital goods grew 44.4 percent. Consumer durables and consumer non-durables recorded growth of 29.9 percent and 2.3 percent respectively.”

‘Indo-Canada trade standing at USD 4 bn annually’“He also mentioned that India stands out in the world, as an emerging market with a strong democratic base, fully functional in English – the worldwide accepted business language, as a country where the rule of law pervades and as a country that survived the economic recession. During the interactive session with Canadian business associations – Canadian Council of Chief Executives and Canada-India Business Council, organized by CII, it was widely recognized that India’s growing middle class and nation wide policies for inclusive growth present tremendous opportunity for participation by Canadian companies.

Govt. clears 23 foreign direct investment proposals“Among the approved proposals were Tikona Digital Network’s Rs. 1,142.21 crore offer for rasing the FDI to 74 percent by issue of compulsorily convertible debentures and Pune-based Bharat Forge’s plan to issue warrants worth Rs.576 crore. Opto Circuits India’s proposal to issue convertible warrants worth Rs.376.27 crore and a request by Intel Capital — the Mauritius-based investment arm of the computer chip major Intel — to acquire equity in the Multi Commodity Exchange of India for Rs.66 lakh also received the nod. The government put off decision on several proposals, including the offer of Gurgaon-based S Tel Private Ltd, a joint venture between Chennai-based Shiva Group and Bahrain Telecom, to issue fully paid-up fresh equity shares to undertake the business of providing telecom services in India.

Indo-African trade to grow by 22 pc in next two years’ “The bilateral trade between India and Africa is likely to grow by 22 percent in next two years, according to an ASSOCHAM paper released in the capital on Friday. “It is projected that bilateral trade between India and Africa could be around USD 55 billion in 2012 from the current levels of close to USD 45 billion,” said Arun Agarwal, chairman of ASSOCHAM’s Africa Committee.”

The exodus of Capital from North America and E.U. had a deadly effect on their Fiscal Quantities (GDP of any country in the World and the most of Developed Industrialized Nations is based mostly on Industrial Production and Return On Investment ROI mostly from Industrial Production).

Japan, Germany and France succeeded in retaining some of their High Tech Industrial Production but both Japan and Germany among others were overrun by China: Japan as the Biggest World Economy and Germany as the Biggest Industrial Exporter, however Germany, France and Japan have balanced their internal demand by strong Social and Infrastructural Policies much better then many other countries have done it.

Applications for employment adjustment subsidies fall in Feb The government grants subsidies to companies which have opted to maintain employment instead of dismissing workers by shortening the hours they work, for example. The subsidies are to make up for a wage decrease resulting from shorter working hours. The number of workers for whom subsidies were applied came to 1,608,149, down 119,066 from January, the ministry said.

The Global Debt Bomb: “Today Japan can borrow all it wants from its own citizens. Over the decades they have dutifully (if mechanically) piled up a $7.7 trillion cache of savings they keep mostly in low-yielding bank deposits. Those savings equal two-thirds of the total household wealth of Germany, France and the U.K. combined, says John Richards, North American head of strategy at RBS”

Japan’s consumer prices continue to fall

By Roland Buerk
BBC News, Tokyo

Japanese exports are rising, but deflation at home is cause for concern

Japan has been in deflation for 12 straight months, figures released by the government show.

Prices fell by 1.2% in February from a year earlier, threatening the country’s recovery from recession.

Japan’s economy has been periodically plagued by deflation since the “lost decade” of the 1990s, which led to years of stagnation.

The prospect that goods will become cheaper in the future makes consumers reluctant to buy today.

This leads to a vicious circle of falling company profits and wages.

Downward trend The latest figures – where the core consumer price index fell by 1.2% – is not as bad as in previous months.

Euro zone deal points to a more German Europe (Reuters) – The masks have fallen. From now on, we will all be living in a more German Europe, with economic policy driven by Berlin’s hair-shirt export-or-die model. That is the lesson of a deal among euro zone leaders on a financial safety net for debt-stricken Greece, adopted largely on German conditions on Thursday after months of wrangling that battered confidence in the single European currency.” The politics of the EU are undergoing a fundamental change at present, with Germany becoming increasingly willing to cast off the shackles of the past and make its voice heard,” said RBS analyst Timothy Ash in a research note.

MF: German economy to grow faster than expectedThe International Monetary Fund is cautiously optimistic for Europe’s biggest economy this year. It expects the German economy to expand by 1.5 percent in 2010. Global growth is estimated at 3.9 percent. (26.01.2010

German economy records biggest slump in post-war historyThe Federal Statistics Office announced on Wednesday that Germany’s largely export-driven economy recorded its biggest-ever decline since World War II last year. The country also breached the EU’s deficit limit. (13.01.2010)

Audios and videos on the topic

Sarkozy ready to trigger EU ‘crisis’ to protect farm subsidies “President Nicolas Sarkozy addressed the nation Wednesday for the first time since his party’s defeat in regional elections. He vowed to push on with reforms and said that he is ready to provoke a “crisis” in the EU to defend French farm subsidies.”

Slight upturn for Paris region but no new jobs yet

“2010 will be a slightly better year than 2009 for industry and service sector companies in the Ile-de-France region which includes Paris and the surrounding area. According to the Bank of France’s annual report – based on a survey of some 2,000 companies – 2009 was a year of stark decline in both sectors. But for 2010, companies are expecting business volume to rise again – slowly but surely.

“The Ile-de-France region is particularly dependent on big companies which have a high degree of international exposure, and it has suffered” from the global crisis, the Bank of France says in its report.”

But it expects the region’s industrial activity to see an upsurge of some three per cent in 2010. The companies rely on consumer borrowing to individual households, which has remained stable.

But there was a sharp decline in investment in 2009. Rejecting claims this might hinder growth this year, the bank’s regional director Bernard Tedesco said, “If we’re dealing with full order books, growth can happen quickly. Investment activities have simply been postponed. And never have conditions been as favourable for companies as now, with interest rates at a historic low.“

But the outlook for employment remains grim, according to the report.

In 2009 companies in the region laid off 4.5 per cent of their staff, and another 1.4 per cent are likely to lose their jobs this year.

“Low profits mean that the CEOs are cautious. The job sector will be the last one to grow,” says the report.

Industry and service sector performance (2009 and 2010)

A survey among industry and service sector companies in Ile-de-France

The study was conducted among 1,022 companies from the industrial sector (producers of industrial or electronic machines, textile, automobile, consumer goods), as well as among 947 service sector companies (transport, merchandising, computer engineering, temporary work). In the Ile-de-France region, more than 300,000 people are employed in these two sectors.

The information and links provided above are to prove that the new trend in Economics differs from the “trickle-down” Capitalism: just because there is not trickle-down of capital to the US market but only trickle-up and trickle-down capital to the Chinese market, also to prove that all tools of economics are to be randomly used “as it comes as: as it goes” as these are used in China and India instead of ideologically used as in US. Pragmatism is about to rule the Science of Economics to the rest of this Century.

Production (only) based economics tighten its monetary policies and financing guidelines on economic indicators reflecting growth in production (could be agricultural, industrial and partially services). Thus it (production based economics) curtails inflation by preventing economies from harmfully over-expanding monetary supplies. Production based economics are all currently used systems: radical capitalistic (like US, Japan), socio capitalistic (EU, China) and anybody else cracking in between, and communist (Cuba, Venezuela). The Paris Club, World Bank, IMF and WTO (lenders-which capital quantities are coming from the developed capital markets of the developed countries such as US, Great Briton and now China) are establishments that follow the ways of production based economics; these establishments’ policies and lending matrix require tight deficit and budgetary control over borrowers mostly less developed countries and markets; lending is done on relatively high interest rates and borrowers are watched closely; their budgetary policies are scrutinized. Thus borrowers are controlled on a daily basis so borrowers are prevented from wrongfully overextending their budget (social, infrastructural, etc. expenses); the usage of Internet has helped lenders to tighten control over borrowers therefore the countries borrowers have much less flexibilities to avoid this “hug” or spent a few dollars over the limit for Social expenses or fix a bridge or two over the limits set to them by lenders. The brightest of the brightest minds are hired by lenders, these mostly young guys would not spare a thing some time to their own nations if borrowers twist the rules anyhow, they thoroughly believe in the system of production based economics.

Production based economics is a reasonable philosophical conception defined very precisely by Karl Marx in his “Capital-Critique-Political-Economy” and clearly very precisely explains dialectic cyclically self adjustable periods of an economy of Capitalism, which economy in different proportions applys to the economies of Social Capitalism and Communism and overall to any system of economics taught ever after by any educational institution from East to West; when even in Communist economics throughout nationalization of industrial tools of production the people as owners of industries are sharing the profit “equally” instead of big fat capitalists smoking cigars taking the profit, they the people (whatever in reality it means) were reinvesting ROI and enhancing their standard of life ( in reality blah, blah , blah), but still the economics of Communism is a production based economics;

Has the production based economics really worked?

Most definitely: yeas, it worked even by experiencing difficulties such as the Great Depression the production based economics and its following financing and controlling practices were in the foundations of any most developed and developing country and market in the world: from the USA and Germany to Japan, all of these countries and their economies were developed by the system of production based economics: that how they avoided economic crashes, inflation and deflation, that’s how they enhanced their standard of life reaching far better life conditions compare anybody else’s; for any poor country these guys reached the sky…. And they did, but

What new happen that makes production based economics inflexible and inadequate?

Actually, what happen were mostly products and achievements of production based economics:

Eastern Block Communist countries change their totalitarian systems and embraced Freedom (which wasn’t a political act but a consequence of inadequate economics: these were the most sensitive to the new developments in a Globalizing marked with constantly rising productivity in the rest of the world: lock of competitiveness knock them off)

Almost any country in the world started pushing toward normalizing international relations and opened their markets

China become a member of WTO, open Her economy for investment and private enterprises

European Union started expanding East and Southeast following aggressive ante-corruption policies in any member country and establishing number of low interest and subsidiary funds for development and promotion of environmentally friendly projects

In the USA productivity was raising wild when risk-management and intellectual properties were becoming most powerful weapons too ?!? getting into China market. Capital was concentrating into smallest and smallest percentage of the population, and middleclass income growth after 2000 came to a hold

High technologies and concentration of capital were making industrial production and farming much easier to export: start up, expand and enhance very quickly elsewhere in a short time limits

Internet allowed people from elsewhere to exchange information and ideas thus making the world a small place; access to self education and new inventions, new marketing strategies and new media approaches

Etc

All of the above and many others were the new events and developments brought by the new Globalization some of which (events and developments) are totally experienced for first time, but the most important are the Environmental issues consequence of long years of indiscriminate pollution by most developed and developed countries industrial revolutions. Environmental issues of Global worming are not just concerns but scientifically proven facts that effect anyone living on Earth; production based economics is based on industrial production profit driven therefore high technologies for generation of renewable energies, technologies for cleaning emission of manufacturing plants are very expensive preposition in a highly competitive world: for US practically implementing Environmentally friendly technologies would make for many businesses difficult to compete to China, Russia and India when even without such burthen competition is fierce. Not the least is the widespread poverty around the world in where countries and markets are barely having enough production to feed their populations then to seriously consider adapting expensive Environmentally friendly technologies and working toward better environment.

Production based economics does not use economic tools to deal with most of these new developments:

Not all countries in a Globalizing market could become industrial: first, because they cannot compete countries like Germany, US, China and Japan that basically are capable to flood this Global market with manufactured goods; second, if all these countries go through industrial revolutions to become industrialized the pollution would be unbearable to the Earth environment

Even very developing countries like China and India should not go throughout industrial revolutions in the old known ways themselves that they could destroy the world easily

In the existing financial system of lending no country but the lenders could subsidize their economies if needed to reduce emissions and improve environment (when even these countries as explained could not do it on a large scale to not becoming uncompetitive)

Last Global recession showed that deregulated production based “trickle-down” Capitalism did not establish “release valves” for handling over-capitalization neither “preventive regulatory policies” to avoid it: the wild-wild-west trickle-down theory of economics did not estimate that instead to trickle-down the capital went oversees being invested in more stable markets, or just was not invested in man-engaging industries in the US particularly when in there these were not competitive and less profit generating)

What kind of economics could enhance production based economics to address above issues, and make ongoing Globalization possible?

Changes in Western economies are naturally ongoing: governments are financing lending institution and insurance conglomerates, buying shares in manufacturers and subsidizing agricultures…. Governments in most developed countries are doing what they can to save their economies from total collapses and this process will continue in the future in and out, but:

Is this kind of Governmental interferences in markets most helpful to these markets approaches to handle world recessions and are there better ways?

The change of production based economics could be changed possibly by an economics of Marketism based on parameters and economic tools to accumulate over-capitalization, and deal with inflation by using “artificial methods” to avoid recessions, using central banking with allowance to issue capital and lend under low interest rates to a World with better security

Quantum leap must be done by developing and undeveloped countries and markets in order industrial revolutions to be avoided thus Earth Environment be protected from consequential for industrial revolutions pollution.

Quantum leap is possible if economics of Marketism is implemented; the new developments in the world are empowering this new economics by the Rising Productivity and Globalizing Markets because of the free trade and high industrial capabilities of most developed countries and markets inflation is avoidable even when production based economics is not used but free entrepreneurship is not replaced by nightmarish governmental bureaucratization which will be probably unavoidable in future recessions if the old system of economics remains.

21th Century Global Financial System of Market EconomyIn the 21th Century currently existing Global Financial System leaded by US and other Most Developed Nations (incl. China) and managed by the Parish Club, WTO, IMF and the World Bank must change their approaches to apprehend the most recent developments of chronically becoming indebted World, in which except for a very few countries and market as China and India, most of the rest Most Developed Economies as US and GB, Developing Countries as Spain, Portugal and Greece, and Undeveloped Countries as Bulgaria, Rumania and many South American Countries, Asian and African Countries are greatly indebted or very underdeveloped. A Central Banking System is needed to control the global “demand-to-supply” balance by being able to issue capital, instead of the current global financial system which performs more as a “lender”.(SEE: “How Globalization affects Countries & Markets” below

Engines of growth

Debt-GDP Ratio’s – Major economies

EU’s economy is contracting now for the last 18 months. The burden of the Welfare State is not reducing. EU’s populations are not scaling down their expectations. Who will pay for these gold-plated services, that Europeans consider is their birthright.

The Chinese+ASEAN economies depend on exports to US and European markets for growth. With these bankrupt economies as customers, the outlook for China+ASEAN is questionable. Middle East depends on US+EU for security, banking, monetary and fiscal management.

There have been many indications that the process of running fiscal shortages for many countries cannot be reverse by using current Economics of Production based “trickle-down” Capitalism, because the Production based Economics is generally founded on industrial production that adds the highest percentage to any country GDP (General Domestic Product) and the consequential fiscal reserves for a country or a market to develop most definitely such country following the economics of production must industrialize, or for an industrialized country such must keep being Globally competitive in industrial production to maintain intact its deficit. The Globalization of the market place propelled by the great Capitalization and the rising Productivity have boosted the economies of China and now India to industrialize rapidly, that industrial power added greatly to the current industrialized economies of Japan, Germany, US capacity by how the Global industrial production capacity overall is coming to a point of great concentration of such industrial production into a very few industrialized economies. The possibilities for other small or even big countries to become competitive in industrial production and maintain their fiscal policies and reserves in tact are diminishing.

From the Most Industrialized Economies US is particularly vulnerable under these new Global developments of ongoing exodus of industrial production and capital investment to the Far East. The Capitalism of US Economics is very inept in distributing and redistributing Wealth so to speak the “demand” side of Capitalism correlates the “supply” and works well in a close marketplace in size of US market when “trickle-down” capital first “trickle-up” to concentrate wealth then comes “down” to create industrial production, but than when such “trickle-down” does not go to the US market but to elsewhere the shortage of consumption cannot be avoided, following in not properly balancing “demand-to-supply”, thus, to avoid economic catastrophes US Government steps up with infusing capital into the system: exactly what happen at the last Great Recession of 2007-2009. Also in time of narrowing ROI (Return Of Investment) particularly for the SME (Small & Medium Enterprises) and from the SMI (Small & Medium Investors), in time of Governmental policies promoting and tolerating pro Big Business and Big Investors deregulated “trickle-down” Capitalism which were mostly the only ones benefiting from the ongoing Globalization, the possibilities in such times for occurrences of Economic Bubbles are quite common. The 1999 Stock Exchange Bubble and the 2007 Great Recession are products of appointed lack of Wealth Distribution. Thus become obvious that the Government in situations like that step into actions by infusing capital, save even individual businesses and prompt social distribution: The Healthcare Reform, the Finance Reform, and the US SME Tax Reform are good examples how the system in distress works, though the consequences are up to be seen. It is hard to believe that the US Government could constantly manage the Economy and create business. In the Next Recession the Government will appropriate more function in financing and business that overall is a scary preposition having in mind how inflexible and inept a Government could be.

Environmental pollution and Earth exhaustion of resources under the current production economics based on industrial production mainly is unavoidable, because when even most developed industrialized nations could introduce and follow policies of protecting the environment, or even the developing nations of China and India follow up which is highly doubtful, there are many countries that will try to manage their fiscal shortages by compromising the rules for Environmental protection thus they can bring to their soil industrial production. In the World of ROI mostly from Industrial Production the prices of Environmental protection technologies are making businesses hardly competitive to others that do not implement these. Pollution comes also from cutting and burning woods to farm or from heating with coal, or from driving old autos, or from dispose sewers into open rivers. So to speak, without curbing on the Global poverty can not be ways to curbing on pollution. But to curb on poverty industrialization cannot be used thus the possibilities for saving the World from Environmental disaster by using industrial production are highly unlike.

To avoid multiple economic crashes and upheaval, to avoid The Government take over when next recessions, to avoid fiscal shortages and deficit, unemployment and poverty, to avoid Environmental destruction a new system of economics is needed, one that will allow countries to develop without being industrialized.

Is it possible to manage Global development without using current production based economics system?

Well the most recent US and any Governments’ infusion of monetary quantities, business involvement and social distribution of wealth is not based on production economics.

The Chinese approaches in handling Economy is not production based only economics: their interference in the ways “trickle-down” capital works in the marketplace does not follow Capitalism but is more-like “artificial” flexible usage of economic “tools’.

The Greece bailout by the EU and IMF is not “trickle-down” economics; it is an interference with the powers of the Capitalism.

There are many more examples of how Governments and organization interfere with freely flowing Capital and therefore using “artificial” methods of economics.

At the moment he mounting debt accumulated by almost any country in the World horrify economists and they predict imminent bust-and-doom (there was a suggestion by some German politicians to Greece to sell some Greek islands, but then funds has been appropriated help Greece). Though economists should be horrified only from high imbalance of “demand-to-supply” ratios, which imbalance provokes inflations and deflations; thus should be the biggest concern to the Global Financial Institutions instead these are fighting deficit and debt: these institution as mentioned above are acting more-like a “lender” then a “controller” these should be. If the Global marketplace is seen in its vastness as a common marketplace a mass industrialization should not be expected and cannot be achieved therefore. Thus, for balancing “demand-to-supply” ratios, the Monetary Policies should be used instead industrializing the entire Earth. Comprehensive Monetary Policies by Global Financial Institutions flexibly using Monetary Quantities as Economic “tools” and Business and Financial Regulations as enhancing business “security” are “the way to Rome” only.

Less Governmental involvement in business, more business laws and regulations on business contracting, business and project bonding, intellectual properties’ laws, risk management personal liability laws, and etc, these the supplements to an appropriate Monetary Policies: because these “regulatory” actions will enhance SME and SMI “security” and make these much more adequate to be financed.

Low interest rate financing and subsidizing are economic “tools” to be used by a Global Financial System in promoting environmentally friendly renewable energies and agriculture, environmental tourism and sustained growth. This new financial system must use commercial banks to invest in countries on project by project basis on set matrix and low margin.

Is any solution for the mounting debt

The Global financing system at the moment represented and executed by the World Bank, IMF and WTO should act as a controller that balances Global supply-to-demand ratios to avoid Global recessions consequential of such (supply-to-demand) serious imbalance;instead this system works as a stubborn lender that controls their(usually small, less developed countries) borrowers’ budgets: monetary and fiscal policies. Obviously the Global financial system did not perform that well in Europe: Greece, Spain, Portugal and etc. where governments were and still are equilibrating between ever rising social and infrastructural expenses and not so fast rising production of their economies: when their neighbors like France and Germany are enjoying high social and infrastructural budgets and which citizens are living in stable and secure environment; less developed countries of Greece, Spain, Portugal are strangling to maintain the European dreams of such prosperity and security however these less developed countries could not compete in anyhow to their well developed big “brothers” by establishing industrial production in levels corresponding to their rising expenses.

Some countries like Bulgaria choose to maintain relatively lower deficit which policies happen to result in even bigger then national debt disastrous consequences because of not being able to raise their standard of life to establish internal consumption or in other words these second category countries which followed the requirements of the Global financial system are in very poor condition (see:http://sites.google.com/site/businesslendingbulgsria2009/)for example 50% of Bulgarians monthly income levels 200 USD which makes Bulgarian market inadequate for development: industrial production, and especially when the Global demand shrank for the last number of years and export is getting harder; whoever even without current Global recession all of these countries (the first category with high debt and the second with limited debt) would never be able to compete in industrial production to their big brothers in Europe, North America and Asia, therefor their balancing social and infrastructural development with growing GDP’s – mostly contributed by industrial production is just futile as it could be!

In this currently used economics: to expand Monetary Quantities and cover ever expanding budgets countries must expand their production by growth based economies and business activities thus and only thus these countries will be able to expand their social and infrastructural expanses or even maintain their current levels of expenditures. Global Monetary System and consequential Global supply-to-demand balance imposed and enforced by the WB, IMF and WTO however does not anymore accounts for Inflationary-Deflationary processes on the Marketplace but more like a stubborn lender only interested in collecting its assets;

National debt has skyrocketed for many countries small and large: Greece and Spain in Europe, United States and Brazil in the Americas, Japan in the Far-East are growing their public debt by running deficit in attempt to overcome shortages in their Fiscal budgets, save their financial sectors in case of the US, or just maintain their preexisting levels of social expenditures as Greece and Spain; or shortages of monetary quantities as Japan.

Most known economists are predicting “doom-and-bust” for these accumulating debt countries and overall for the Global financial system that in someway has to take on the setback of these countries default or even possibilities of default on debt payments or issued papers devaluation payments:

Seems most recent times do not differ from that when currencies lost their gold reserve backups and even farther when farming was replaced by industrial production as a main employer and GNP source: in both cases then economists were predicting “doom-and-bust” and the end of the world; but alike then neither inflation nor deflation are coming too dangerous for the economy levels therefor the World from monetary stand point will be probably still standing and what is going to change is the Global Central Financing System that instead of being only a lender collecting “paper” assets will start acting as a controller and a regulator balancing “demand-to-supply” ratios and avoiding Global crisis: but for this thing to materialize most recent industrial production based economics must change too: how so? – just as simple as it could be the ongoing Globalization (best represented by China and India) supported by rapid rising Productivity and Over-capitalization have prompted a world of difficulties for less developed countries and markets to develop or continue maintaining competitiveness to China, US, Germany and Japan’ capacities for industrial production and competativeness. When Monetary Quantities for a country are directly related to this country industrial production the dead heat of the ongoing competition does not work in any help to any less developed country, therefore the struggle for such a country to maintain social and infrastructural expenses in such short of Monetary Quantities is becoming futile; The Global Recession particularly accelerated these new processes of financial turmoil for less developed countries and markets. Very good examples are Greece, Spain, Bulgaria, and etc. At the same time in a consumption driven economics as we are at with reducing consumption comes e diminishing production that consequently hits back to the industrial developing and most developed countries and markets, and so… on and on.

But is the “doom-and-bust” time unavoidable when the mounting debt of US and Japan reduce Global financial system to nothing?

May be so?…… but it is not going to happen, and how so?

The Global financial system of tighten to mostly industrial production Monetary Quantities is about to change in the ways last two exampled changes (of gold backed currencies to the current industrial production based and agricultural dominance to industrial production) it will change to a market driven Monetary Quantities basically tighten to most current market possibilities to avoid inflation or deflation (see: Quantum Economics-Philosophy of the Economy). The Global Central Banking System must be allowed issuing “capital” thus individual countries debt could be offset by low interest loans and subsidies: when such financing would not create dis-balance to “demand-to-supply” ratios.

Through low interest rates and subsidies to less developed countries and markets, and through development of Environmentally friendly technologies subject of these low rates and subsidies many countries and markets will be able to maintain some social expenses and infrastructure without becoming industrialized: organic production and renewable energies, environmental tourism and landscape protection, could be well enhanced and will become sources of growth, too.

Quantum Economics-Philosophy of the Economy-Quantum Leap in Market Economics

In market economics economic tools (quantum economics: parameters) are used indiscriminately (not politically motivated but statistically formulated) to maintain balance (quantum economics: grid or quantum quantities) demand-to-supply ratios; Compare to currently used production (based economics that should be using self-adjusting dialectic economics of trickle-down approaches for development.

Because, economic tools (parameters) are “artificially” applied to limit over-capitalization or under-capitalization effect on real economies and markets, these (economic tools, parameters) may well be used to increase or decrease different parts of economies, markets by artificially accelerating or slowing business activities.

In modern times ecological issues are becoming extremely relevant to Earth survival: developing and less developed countries’ industrialization (considered by the standards of production economics only ways for development) will destroy Earth either by polluting the environment to point of no return or by exhausting Earth resourses to point of no return: both scenarios Earth will not survive such mass industrialization; In third scenario if developing and less developed countries and markets are pressed to stay as these are by using financial means and these (developing and less developed countries and markets) remain in such underdeveloped condition these still are growing in population and gradually polluting Earth and destroying Earth resources in much higher then most developed countries and markets rates; also in deregulated global market environment when environmental rules and regulations are obeyed by most developed countries and markets but not obeyed by other markets then industrial production will move to deregulated areas thus pollution is unavoidable in current production profit (only) based economics.

Quantum Economics Leap or Quantum Leap is ‘controlled’ economic jump executed by pointed use of financial means (low rate business loans and subsidies) to different areas of real economies and markets {particularly less developed countries, markets or parts of markets (in this category: parts of most developed countries and markets’ underdeveloped areas could be considered)}

Predominantly, development of less developed countries and markets, or parts of markets should be directed toward environmentally friendly technologies: renewable energy sources, organic farming, environmental tourism and etc. In economics of Marketism countries and markets should not necessary become industrialized to raise their life standards and development is not (only) related to industrial production:

Question:

Where industrial good will come from to bring needed supply to such growing demand from non-industrial development?

Answer:

It will come from globalizing rapidly expanding production of countries and markets of US, Japan, China, India, etc.

Globalization of industrial production and rapidly rising productivity could provide needed industrial and high tech “supply” to growing by quantum leaps consumers “demand”; to prevent from imbalances of demand-to-supply ratios central banking system should be established that uses formulas for monetary quantities and fiscal quantities and precisely applies economic tools (parameters) to limit economic recessions (quantum economics: energy buildups and consequential big waves). (See: Quantum Economics-Philosophy of the Economy-Monetary Quantities Formulas and etc related articles).